It seems Novavax (NASDAQ:NVAX) is finally turning over a new leaf after its recent struggles. The biotech’s shares have rallied by nearly 47% in the early trading session today. This surge follows its recent licensing deal with Sanofi (NASDAQ:SNY) and stellar growth in its first-quarter revenue.
NVAX’s Recent Challenges
Novavax’s share price had slumped by nearly 97% over the past three years as its sales plummeted in a post-COVID-19 world. NVAX was late to file for regulatory approval for its COVID-19 vaccine. Last year, it had raised doubts about its ability to remain a going concern. “Going concern” refers to a company’s ability to continue operating and meet its financial obligations in the foreseeable future. Additionally, it has been facing activist investor heat in recent times.
Sanofi Deal May Turn it Around
However, the company removed doubts about its ability to conduct business following a $1.2 billion licensing deal with Sanofi. Under the deal, Novavax will co-commercialize its COVID-19 vaccine and develop COVID-19-Influenza combination vaccines with Sanofi. It will receive an upfront payment of $500 million and nearly $700 million in milestone payments.
NVAX will also receive royalties in the double digits from SNY for its vaccine sales. Importantly, SNY is picking up a 4.9% stake in NVAX, valuing the company at around $1.4 billion, according to Reuters. In comparison, NVAX’s current market capitalization stands at roughly $627.6 million.
NVAX’s FY24 Outlook
Moreover, NVAX raised its outlook for Fiscal year 2024, now anticipating revenue of $970-$1,170 million for the year (inclusive of the Sanofi deal payments). Its prior revenue estimate for the year was $800-$1,000 million. In Q1, the company’s top line rose by nearly 16% to $94 million. Additionally, its net loss for the quarter narrowed to $148 million from $294 million a year ago.
What Is the Price Target for NVAX?
This slew of positives could mean a potentially sustained rally in Novavax’s share price over the coming days. Overall, the Street has a Hold consensus rating on the stock, alongside an average NVAX price target of $9.75. However, analysts’ views on the vaccine maker could see changes following today’s earnings report.
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